Glossary · The loan itself
In short
A type of seller financing where the seller agrees to defer repayment of their loan until the SBA loan is fully satisfied or certain conditions are met. It's essentially 'subordinated' to the SBA loan.
This is common when the seller provides financing to bridge a gap in your equity injection or project costs. The SBA requires specific language in the standby agreement to ensure the seller's note doesn't interfere with your ability to repay the SBA loan. Expect strict terms, including no payments for at least two years.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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